Thursday, June 11, 2009

The foundation for the construction of a modern port with Chinese assistance at Hambantota in southern Sri Lanka was formally laid in October,2007. The construction actually started in January,2008.

2. It is a 15-year project to be completed in stages. The entire project is estimated to cost US $ one billion. The present Chinese commitment is for the construction of the first stage only, which is estimated to cost US $ 360 million. China has agreed to give 85 per cent of this amount at concessional interest. The balance is being contributed by the Government of Sri Lanka.

3.The first stage of the 15-year (2008-2023) project is expected to be completed by the end of 2010. This stage envisages the construction of a 1000-metre jetty, which will enable the harbour to function as an industrial port for the import and export of industrial chemicals, fuel and heavy machinery. By 2023, Hambantota is projected to have a liquefied natural gas refinery, aviation fuel storage facilities, three separate docks giving the port a transshipment capacity and dry docks for ship repair and construction. The project also envisages that when completed the port will serve as a base for bunkering and refueling.

4. The draught (depth) of the new harbour will be 16 metres against 15 metres in Colombo. A 230 metre passage-entrance channel will be created at the breakwater which is 988 metres long on the west end and 311 metres long on the east end.

5.The Government hopes that as a refueling location Hambantota will have many advantages over the Colombo port or ports in South India. The construction has been undertaken by a consortium of Chinese companies headed by the China Harbour Engineering Company and the Sino Hydro Corporation.

6. The project doesn’t have a separate consultant. The Sri Lanka Port Authority (SLPA) is functioning as the client-cum-consultant while the China Harbour Engineering Co Ltd is the contractor. In September,2008,there were 328 Sri Lankans and 235 Chinese working at the site-----engineers, administrative personnel and others. The present number is not known.

7.The first stage due to be ready by end 2010 will allow three ships to berth. The final stage, for which there is no offer of funding yet from China, is planned to accommodate more than 30 ships, which is the present capacity at Colombo.

8. Reliable reports say that while the Sri Lankan authorities want Hambantota to emerge as a modern port with better facilities and efficiency than any of the ports in South India, they do not want the present importance of the Colombo port to be reduced. Colombo presently has the reputation of being the most modern and most efficient port in South Asia. They want this reputation to be maintained. There is no proposal at present to set up container yards and cater to container ships at Hambantota.

9. The present Chinese interest is in the use of the docking and refueling facilities that would come up in Hambantota for their commercial and naval ships. There is no proposal at present for a Chinese naval base at Hambantota.

10. The Chinese have helped Pakistan in the construction of a similar port at Gwadar on the Mekran coast in Balochistan. The first phase of the construction has already been completed and the port was commissioned when Pervez Musharraf was the President.The contract for the running of the port has been given to a Singapore company.

11. From the beginning, Gwadar was planned as a naval-cum- commercial port. Both Pakistan and China were interested in its naval potential. Pakistan wanted the naval facilities in Gwadar to give a strategic depth to its navy and reduce its dependence on the Karachi port, which is vulnerable to attack by the Indian Navy in times of war. The Chinese were interested in the use of the refueling and docking facilities of Gwadar for their naval ships visiting the Gulf area.

12. The Pakistanis had and continue to have ambitious plans for the development of Gwadar as a port to cater to the external trade of the Central Asian Republics (CARs) and the Xinjiang and the Sichuan provinces and the Tibetan region of China. They also offered to the Chinese the use of Gwadar as a transshipment point for oil and gas, which could be brought to Gwadar and from there moved by pipelines to Xinjiang. They also proposed the construction of a rail and road network between Gwadar and Xinjiang. They are also interested in the construction of a huge oil refining capability in Gwadar. Beyond agreeing to feasibility studies in respect of these proposals emanating from Pakistan, the Chinese have not made any firm commitments regarding their participation in any other project in addition to the port construction.

13. Even though it is about two years since the Gwadar port was commissioned, it has not been attracting many ocean-going ships. Most shipping companies prefer the continued use of the Karachi port despite its inefficiency. This is mainly due to the poor security situation in the Makran coast and the failure of the Pakistani authorities to develop the road and other infrastructure, which could sustain an increased level of activity at Gwadar. Even the Chinese preferred using the facilities at Karachi for the ships of their anti-piracy patrols than the facilities at Gwadar. Unless and until there is peace and stability in Afghanistan, the prospects of Gwadar emerging as the gateway for the external trade of the CARs will remain weak.

14.In contrast to Pakistan, Sri Lanka’s interest in developing Hambantota has remained purely commercial. It has very limited external trade. The Colombo port is able to meet satisfactorily its external trade needs. It does not need another port for this purpose. Its interest in Hambantota is as a source of additional foreign exchange earned by offering world class facilities and efficiency to international shipping companies. It is hoping that the present Colombo port and the new port coming up at Hambantota will give it an advantage over India, whose ports are not known for their modern facilities and efficiency.

15. The Sri Lankan Navy has a long history of cordial relations and co-operation with the Indian Navy. It fears no threat from the Indian Navy. As a result, the interest of the Sri Lankan Navy in Hambantota is minimal. But the Chinese interest is more strategic than purely commercial. It is very unlikely that Sri Lanka would allow the Chinese Navy to use Hambantota against India. But a Chinese naval presence in Hambantota would add to the concerns of the Indian Navy by increasing the vulnerability of the South to pressures from the Chinese Navy.

16. Reliable reports say that the Chinese have not so far raised the question of developing Hambantota as a naval base which they can also use to ensure the security of their oil and gas supplies. But they do not rule out the possibility of the Chinese raising it if and when negotiations are held for additional Chinese financial commitments for the subsequent stages of the project. (12-6-09)

( The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )